Trust fund could help finance EGC proposal
THERE ARE few, if any, recommendations contained in the broad outlines offered by Michael Lee-Chin’s group to drive sustainable growth in Jamaica with which reasonable people would disagree.
Indeed, Mr Lee-Chin, the billionaire banker, and the members of his Economic Growth Council (EGC) implicitly concede that macroeconomic stability is not the sine qua non for sustainable economic growth, but were not compelled to dwell on this issue, except for a few minor points of policy detail, to encourage the Holness administration to enter a successor agreement with the International Monetary Fund when the existing one expires next year.
There is logic to the absence of emphasis on this point: Jamaica, having been at the precipice, has been having a good go over the past four and a half years at managing its fiscal affairs. It has run a current account surplus of more than seven per cent of GDP, contrasting with the reduction of its debt from 150 per cent to 125 per cent of GDP; the current account deficit has slumped from 13 per cent of GDP to under two per cent; the Government, for the first time in nearly two decades, is about to balance its Budget; and investor confidence is high. But while the needle has begun to move on growth, these gains, it is felt, are not themselves sufficient to generate GDP expansion at the proposed sustained five per cent level projected by Mr Lee-Chin by 2020.
So, the EGC has proposed a number of other interventions, most of which, such as creating an efficient and responsive public bureaucracy, have long been on the agendas of Jamaican administrations, but over which they dithered, mainly because of an absence of consensus and a lack of political will. Significantly, however, Mr Lee-Chin’s team highlighted improving citizen security and safety “as the single most important growth-inducing reform that Jamaica can undertake”.
That declaration makes sense. Although murders are down around 30 per cent from six years ago, the homicide rate, hovering at 45 per 100,000, is among the world’s worst. Worryingly, the recent trend suggests a growing incapacity to curb violent crime in the west. This is happening in an environment where most murders are never solved and few killers are ever brought to court, much less convicted. At the same time, Jamaica has a snail-pace legal system, with its courts clogged with nearly half a million cases. Yet, most economic analyses suggest that lowering the murder rate to low double digits would increase its GDP by up to six per cent if it could bring its homicide rate to a low of 10/100,000, or less.
On this front, Mr Lee-Chin outlined a range of reform initiatives that ought to have the support of the political Opposition, given that they essentially echo ideas and programmes that were touted, and in some instances, implemented by Peter Bunting and Mark Golding, respectively, the ministers of national security and justice in the previous government. The difference here is the call for coordination and oversight. Except for the suggestion to “divert” J$500 million a year spent by the constabulary on rent to construct purpose-built police stations, Mr Lee-Chin’s group did not cost, or propose how these initiatives are to be funded. The Government, clearly, will have to reallocate resources, for which it has to build consensus.
On the way forward, especially for the sustained financing of a modern and efficient judicial system, we suggest that the administration borrow, with the appropriate tweaks, the model employed by regional states for the Caribbean Court of Justice: the establishment of a self-sustainable trust fund. Taking into account its debt-sustainability obligations, Jamaica could put up seed capital and call on international partners for assistance.